In this new report, Engauge executives share their perspectives on the most important challenges and opportunities facing the advertising industry, revealing thought-provoking ideas about what it takes to truly engage consumers in today’s culture. Emerging technology insights include evaluations of the most important platforms for digital marketing and what to expect from interactive TV, as well as key takeaways from the retail industry on managing convergence. The report also features critical perspectives on important issues in contemporary culture, including privacy concerns in the social media ecosystem, and the radical reorientation of the relationship between brands and consumers.

1. 1
EIGHT QUESTIONS ANSWERED
Digital Insights

2. contents
What is the role of creativity for brands today?
Mike Bednar, chief creative officer | 03
What’s the most important tech platform today in digital
marketing? Raghu Kakarala, svp, creative technologist | 05
What can brands learn from retailers’ embrace of convergence?
Shannon Delaney, director of behavioral brand planning | 07
What can brands expect from interactive TV in 2011?
Excerpted from The Engauge 2011 Digital Outlook.
Tomer Tishgarten, vice president of technology | 09
Download the full report @
www.engauge.com/2011-digital-outlook.
How can brands stay relevant to consumers today?
David Grzelak, executive director, brand planning | 11
Is social media amplifying an aspect of human nature that
mass media didn’t activate? Patti Ziegler, chief marketing officer | 13
What social media metrics matter today for brands?
Cover Image:
Scott Hildebrand, chief consumer relationship officer | 15
Sabbath Photography
http://www.flickr.com/photos/msabbath/2350853664/
Licensed under Creative Commons. Can privacy survive in the social media ecosystem?
To learn more, visit creativecommons.org. Mya Frazier, director of trends and insights | 17

3. Q
3
POINT OF VIEW
What is the role of creativity for brands today?
Welcome to the democratization of creativity. What do I mean? vibrancy of reality. It chose dialogue over monologue. The opinion
Well, let’s go back—starting a few centuries to a few years ago. of a teenager from Antioch, Wisconsin became as valuable as the
Creativity was, by its nature, elitist, owned by few and awed by many. postulates of a tenured Harvard professor. Anything was possible, and
In order to create, you needed tools, a location and resources, not the unexpected became the expectation.
merely talent. The prohibitive costs and time commitments relegated
creativity to those with the capacity to pursue it—the funded painters Emotion hijacked logic. It was no longer necessary for logic paths
and poets, the industry-backed musicians and filmmakers. to move rigidly from awareness to persuasion. No, it was marketing
anarchy where the targeted audience usurped brand positioning right
It was no different in business. Ad agencies possessed all the time, from the hands of unsuspecting marketers.
tools and talent to create. Consumers sat back passively and watched
or listened. Because agencies, bankrolled by marketers, could afford Now, what consumers say—in blogs and microblogs, on social
to create the message, we had control. We owned the influence; we networks, in email chains, on socialized sites and video sharing
commanded the mediums. We held all the creative cards. platforms—is the voice of your brand. And it can change in a
nanosecond without rhyme or reason. Like it or not, this is the new
Then technology came along and reshuffled the deck completely. world of creative influence.
In the hands of the many, the voice of creativity changed. Its
tone became collaborative. It eschewed production polish for the Some brands will resist, some will reluctantly accede. But those brands

4. 4
Mike Bednar chief creative officer
READ MIKE’S BLOG:
ENGAUGECREATIVITY.COM
that not only embrace but also join their new creators will triumph. Here’s
the secret to why: Brand positioning, by its very nature, is emotional. Its
foundations are, and have always been, built on constantly shifting sands.
Perception is reality. And consumers have always held the ultimate control—
they’ve either believed or they haven’t. They’ve created images of brands
in their own minds. Now they simply have the ability to create the outward-
facing image. Consumers accept the creative messages of other consumers
more readily than from marketers.
So give them the tools to create, unleash experiences and invite them in. Let
them influence your brand’s direction, not the other way around. Trust them
to know as much about themselves as your precious research does. Allow
them to disagree, to argue—at least they’re talking. Create two-way content;
share everything you have—without hesitation.
Their creativity is limitless and infinitely effective. When it’s built around your
brand, it becomes the most powerful marketing tool any brand could possess.

5. 5
Q
POINT OF VIEW What’s the most important tech
platform today in digital marketing?
Social is no longer an optional add-on; it’s the new default. Facebook
reached an epic milestone in November, accounting for a quarter of
all webpage views in the U.S., according to Hitwise. For some brands,
social presences are now the primary platform for brand expression and
interaction. In 2011, their owned-media channels will be augmented by
and community managers—but success in social is rarely attributable
to how much money you throw around. Rather, social campaigns live
or die as a result of creativity, commitment and mindset. Creativity,
in particular, matters more than ever. Unlike traditional media like TV,
brands can’t “rent” an audience for thirty seconds by buying a spot in
traditional homepages, rather than the other way around. a popular program. In social media, brands have to build and retain
their own audience.
However, those tech-savvy brands are the exceptions; the bulk
of marketing has not kept pace with the advance of innovation. Marketers bemoan the proliferation of platforms because of the
Brands should also recognize that successful owned-media channels increase in required resources. They continue to view these platforms
on Facebook, Twitter or YouTube can be launched with minimal as “tactics,” rather than an invaluable extension and expression of
technological sophistication and very little up-front investment. It’s not consumers themselves. Brands should take solace in the fact that
completely free—somebody has to pay the salaries of dedicated staff these technological changes have reinvigorated engagement.

6. 6
Raghu Kakarala svp, creative technologist
FOLLOW RAGHU ON
TWITTER @INTERPOLATE
Social and mobile have increasingly become essential “life tools” for
mainstream users. Over 20% of U.S. consumers visit social networking
sites and blogs on their mobile phones, according to comScore, and it’s
expected that half of all U.S. consumers will have a smartphone by the end
of 2011. If consumers are allocating their time and money, what’s holding
back brands?
Today’s early adopter is often an average consumer, rather than the
neighborhood techno whiz. That’s why it’s not too early to begin testing
emerging technologies like connected TV, where brands can come alive
through addressable commercials, or social TV, with mobile apps that
enable audience participation. These technologies may be logical next
moves for brands that have already mastered their owned-media channel.

7. 7
Q
POINT OF VIEW
What can brands learn from
retailers’ embrace of convergence?
Every day, shopper expectations get higher and higher, and the brand
that is present in every channel on every device is the one that is
going to have the best chance to make a real connection with them.
Not long ago I stumbled across an Altimeter report, “The Rise
of Social Commerce,” that talked about the enlightened state of
Consumers shop in stores while using their phones to check
competitive pricing, read product reviews and ask their network of
friends for their thoughts and experiences. The more considered the
purchase, the more highly social it becomes as anxiety to make a good
decision drives consumers to reach out for real-world input. Accepting
and enabling these behaviors is the first step. Best Buy gets a nod for
“frictionless commerce” in which social and retail are integrated for early adoption by putting Internet-connected terminals inside stores to
a completely redesigned shopping experience that’s truly consumer- allow consumers to do that very thing.
centric. Even for non-retail brands, there are benefits to adopting an
e-commerce mindset when it comes to convergence. But why We now see the integration of Facebook Connect with brands’ own
stop there? site-registration processes. In addition to making the log-in process
simpler, Facebook Connect provides a detailed picture of customers.
The future of marketing is frictionless engagement. I call it brand The data goes far beyond demographics. We know what books they
nirvana and define it as the removal of barriers that inhibit consumer read, events they attend, brands they care about and who their friends
decision making. are. Amazon is leading the way by making the site your experience,

8. 8
Shannon Delaney director of behavioral brand planning
reminding you to buy gifts for friends’ birthdays and suggesting books and
music you should buy based on your “likes.”
Sometimes people are so excited about a great score or the pure joy of
something they recently purchased, they want to share it with the world in
real time. And yet, recently, a client asked, “Shouldn’t we wait to launch our
social presence and spend six weeks doing focus groups to ask people what
they really want from our social offering?” My answer: “Why wait? Every day is
another day that you aren’t present in a place that they expect you to be and
even more important is you have a social focus group right there.”
To truly influence consumer behavior, you need to recognize that digital
retail and social are not isolated channels. Seamlessly integrated and highly
personalized experiences will lead to frictionless engagement. That’s not only
nirvana for brands; it’s also heavenly for consumers.

9. Q
9
POINT OF VIEW What can brands expect from
interactive TV in 2011?
Interactive TV represents a hybrid medium where on-demand content adopters are already vested. They are astute consumers with the high-
and Web applications meet the biggest screen in your home—the est expectations, highest technology-specific investment and highest
television. Consumers with Interactive TV sets use built-in applications potential for engagement in the near term. They’ll be experimenting
(widgets) to access content such as YouTube videos, Flickr photos and with the applications to figure out, essentially, what the new technology
Pandora music, along with social media from Facebook and Twitter. can really deliver. If their expectations and interests are fulfilled, these
initial experiences will help shape mainstream consumer behavior of
Television set manufacturers have been eager to roll out interactive the future.
TV (a.k.a iTV or connected TV) with the hope that it would spark con-
sumer demand like high definition did in years past. However, current Brands have an opportunity in 2011 to dip their toe into this medium
barometer readings indicate that these smart displays are poised for and begin to experiment on a limited budget by turning to a set-top
lukewarm interest at best among mainstream consumers. Research box, such as the Logitech Revue with Google TV. This device represents
from Forrester has confirmed that approximately 40% of users who an alternative component within the typical home entertainment center,
own interactive TVs either failed to connect their TV to the Internet or and in many cases, consumers who want interactive TV will opt for such
connected their display yet failed to use this feature. a device rather than replacing their TV display. This is particularly true
for the most tech-sophisticated crowd, who may be in no hurry to ditch
While the mainstream consumer may be out for now, early technology their traditional, expensive, 42-inch, high-definition displays.

10. 10
Tomer Tishgarten vice president of technology
FOLLOW TOMER ON
TWITTER @TOMERIFIC
OR ON HIS BLOG
ALLTHATIKNOW.COM
The Logitech Revue is powered by the popular Android mobile operating
systems. Developers that have built mobile applications will be able to technically
repurpose them once the Google TV software development kit is available.
When Google rolls out the Android Marketplace in early 2011, marketers and
developers will finally be able to deploy their custom applications and fully
experiment with this technology. Additionally, Apple is expected to follow suit by
expanding support for third-party iOS apps on their Apple TV device.
By jumping into this category in 2011, with apps and related media like interactive
social and video content, brands have serious potential for high-visibility impact in
this much-watched space.
Marketers can bring a creative touch to the technology, delivering eye-
popping content that unleashes the exciting possibilities of the new medium.
Technology consumers, manufacturers and the media are all waiting for the true
innovators to step forward.

11. 11
Q
POINT OF VIEW How can brands stay relevant
to consumers today?
In order for a brand to become “social” and do so in a meaningful
and relevant way, brands must get beyond thinking and defining
themselves solely as a set of product benefits. Why? Because
product benefits are a short and uninteresting topic for social
conversations and they certainly don’t add any badge value or
meaning to the brand that makes them “like-worthy” to our
Branding today requires a new approach—an approach that doesn’t
start with a proclamation about what we are or how we want
consumers to feel about us, but with an understanding of consumer
culture and the cultural meaning that surrounds the consumption
of our brand. Branding is no longer done from the inside out; it
works from the outside in. Letting the values, beliefs and attitudes
narcissistic and in-control consumer. of consumers shape and define our brand so that our positioning
doesn’t just create category relevancy, but cultural relevancy.
Today, in a world of over-choice, where product benefits and features
are quickly and easily copied by competitors and where buzz terms This is a big and necessary shift in the way we approach branding.
like social, dialogue and interaction have replaced the safety of simply Letting consumers define your brand makes for more relevant
sending out ads into the market, the whole notion of positioning connections and increases the meaning of your brand in the lives
a brand upon its unique space within a category has become as of consumers. It takes us beyond the package and product to a
antiquated as defining a cell phone by its ability to make a phone call. positioning that allows brands to become alive and infinitely more

12. 12
David Grzelak executive director, brand planning
READ DAVID’S BLOG AT
DAVIDGRZELAK.COM
interesting in the day-to-day lives of consumers. The minute we, as
marketers, put ourselves in the context of a category, we immediately
limit the usefulness and meaning that our brand can have in the
marketplace. We reduce ourselves to features and attributes, but
thinking of our brand through the lens of consumer culture opens up
an endless source of inspiration and imagination.
So while we may see narcissism in the behaviors of consumers in
social media, we, as brands, must let go of ours. Nothing good comes
out of a conversation between two narcissists, and it may just be time
for brands to replace our narcissism with a little bit of humility and finally
recognize that consumers do, in fact, define and own brands.

13. 13
Q
POINT OF VIEW Is social media amplifying an
aspect of human nature that mass
media didn’t activate?
If every person wants to be a brand and every brand wants to be a
person, where does that leave marketing? What does it say about our
culture that young girls want to become celebrity brands like Miley
Cyrus, while companies and products are competing to be our friends?
Brands were once the cornerstones of consumer culture, but with the
face it, though, brands are lucky consumers let them in to the party
in the first place. Rather than barring the door, they’ve brought
brands into their social scene. They’ve taken us inside their houses,
they’ve shared their thoughts, they’ve expressed sincere interest.
We may be living in a nation of narcissists, but consumers are
actually encouraging brands to behave more like people—in other
rise of social media, consumers have increasingly subsumed brands. words, more like them.
They’re now the producers and the consumers. Brands are sidelined to
serving “content,” which, sadly, makes marketers sound like caterers— People have always projected—we put on our best face in public.
ferrying drinks to VIPs at a cocktail party, desperately hoping everybody But that kind of social projection used to happen in private
likes the appetizers. encounters, smaller settings. It wasn’t mediated. The message
wasn’t packaged and broadcast across global networks like Twitter
Advertising, long acknowledged as both tastemaker and toastmaster and Facebook. People weren’t building their own personal brand.
in American culture, is now mostly a facilitator. It’s the hired help. Let’s They weren’t marketing themselves.

14. 14
Patti Ziegler chief marketing officer
READ PATTI’S BLOG AT
PATTIZIEGLER.COM
Jacob Lewis, co-founder of teen literary social salon Figment.com, observed
that in the past there was no expectation that famous authors would
correspond with their readers. “That’s not true now,” says Lewis. “There’s
been a fundamental shift. When kids today interact with the authors they
love, they expect a response. They demand a response. Reading isn’t a
passive experience for them; it’s a social one. People want to participate.”
Which means it’s a mistake to get too preoccupied with notions of
narcissism, because there’s also a brighter side to this paradigm—a vibrant
culture that finds value in creating and contributing, not just consuming.
Brands aren’t celebrities. They’re not people and they’re not peers. But they
can be very useful friends. And that’s worth considering in this new creative
context. There’s a party going on—now go serve those canapes.

15. 15
Q
POINT OF VIEW What social media metrics
matter today for brands?
As an industry, we’ve spent a lot of time asking ourselves: What’s
the value of a Facebook friend? But that’s always been the wrong
question. And, ultimately, an impossible one to answer. The
necessary and logical questions to ask instead are: What is there to
readership figures or viewers of a TV show. And just like those metrics,
it doesn’t speak to impact or relevance. It indicates audience. And
just like the mass market of the distant past, Facebook’s aggregate
audience is massive. It reached 70% of the U.S. Internet audience in
learn in the social media space? And how can we use this knowledge 2010, up from 48% in 2009, according to a recent report by
to create more meaning in the lives of consumers and, therefore, J.P. Morgan.
value for a brand? As with any technological innovation, especially
those accompanied by a radical shift in social and cultural norms, And yet we remain essentially toddlers in the social media space
figuring out what it all means for marketing practice doesn’t happen when it comes to metrics. The only thing we’ve figured out is how to
overnight. Yes, fans are a measurable outcome, but not necessarily count things. We need to move from talking about X or Y brand being
the best metric. Fan counts are simply what is available. Marketers mentioned 10,000 times to “what did these consumers actually say?”
gravitate by habit to these measurements because they are similar to It’s essentially a move from quantitative to qualitative data analysis.

16. 16
Scott Hildebrand chief consumer relationship officer
We are at a very binary stage, asking whether something is good or bad.
We must move on to intent. There is a richness in social conversations that
brands need to tap. The future will be dashboards that will tell you how well
your social media performed in terms of activity. We will get to the point
where we will be able to gauge how well a social campaign performed in
terms of brand perception. Once we understand how brands are perceived,
we can start to alter those perceptions and drive category growth or a
brand positioning against a competitor. And that’s certainly not counting or
a superficial indication simply of popularity or buzz. That’s where analytics
must improve—linking an individual with their ability to drive actions that
create value for a brand. It’s an uphill climb, but we will eventually arrive at
that level of granularity with our analytics.

17. 17
Q
POINT OF VIEW
Can privacy survive in the
social media ecosystem?
As our public selves merge perceptibly with our private selves on so-
cial networks, our notions of what constitutes privacy—arguably even
the very definition of privacy—is undergoing a radical revision.
Mark Zuckerberg audaciously quipped in 2010 that privacy was no
interests and schools attended—of the remaining users? The answer
was perhaps predictable: Yes. It was the high degree of accuracy that
was surprising. Even when given information on as little as 20% of
users, the personal attributes of the remaining users could be broadly
determined.
longer a social norm. For most of the 550 million users of Facebook,
the idea of a “private” profile on Facebook apparently persists. But, Put more simply, we are friends with people like us. Our networks
in fact, there is no such thing. reflect commonalities easily inferred by even the most basic of algo-
rithms. Just by joining—often under the illusion of privacy—we reveal
A recent study of online social networks started with this premise: ourselves. But few stop there. Instead, we share some of the the most
Given the known attributes of some fraction of users in an online so- intimate details of our lives—children, marriage ties, school and work
cial network, can we infer the personal details—geographic location, connections. We voluntarily make ourselves more vulnerable—but

18. 18
Mya Frazier director of trends and insights
vulnerable to what, really? RapLeaf? The People’s Republic of China? The
threats remain largely abstract, opaque, seemingly academic. With every
new status update, we may be entering a Faustian bargain, but we really
can’t see whose hand we’re shaking.
As Facebook grows ever larger and more powerful, we’re increasingly
caught in a zero-sum game between participation and privacy. The emerg-
ing cultural norms of transparency, openness and connectedness involve
some inherent sacrifices. The question remains whether these tradeoffs will
be worth it.
FOLLOW MYA ON
TWITTER @MYAFRAZIER OR
ON HER BLOG
MYAFRAZIER.TUMBLR.COM

19. © 2011 Engauge. All rights reserved.
19
About Engauge
One of the nation’s largest independent agencies, Engauge leverages
creativity and technology to develop transformational ideas that connect
brands and people. Engauge guides a growing roster of clients on the path
to realizing the power of digital channels by focusing on driving results and
sustainable growth for brands. The agency’s client roster includes Nationwide
Insurance, DAD’S Pet Care, The Home Depot, Best Buy For Business, Chick-
fil-A, Brown-Forman, Food Lion, Van Gogh Vodka, NGK Spark Plugs, Perkins,
IHG, UPS, Logitech and more. Engauge, which has offices in Atlanta, Austin,
Columbus, Orlando and Pittsburgh, is a portfolio company of Halyard Capital.
For more information, contact:
Patti Ziegler
Chief Marketing Officer
614.573.1472
pziegler@engauge.com
Engauge
375 North Front Street This report is an excerpt from
Suite 400 The Engauge 2011 Digital Outlook.
Columbus OH 43215 Download the full report at
engauge.com www.engauge.com/2011-digital-outlook.